Big banks to feel the heat from Federal Budget

AUSTRALIA'S big four banks will be targeted in tomorrow's budget where the Treasurer will announce new measures to make the financial sector more competitive.

The changes are expected to include a Productivity Commission review, with customers to reportedly have access to their banking data to better shop around.

"It is important ... that we understand what are the barriers and what are the things preventing customers getting a better deal," Treasurer Scott Morrison told Fairfax Media.

There was no doubt the major banks had become more powerful since the Global Financial Crisis, Mr Morrison said.

Customers and regulators would get a chance to have their say in the Productivity Commission inquiry, which would look at banks having both retail and wealth arms among other issues.

The inquiry will report to the government by mid-2018, putting the issue squarely on the agenda for the next federal election.

It's understood the inquiry will contain similar terms of reference to what Labor and the Greens are calling for in a Royal Commission.

"It's important that we deal with these things now," Mr Morrison told Fairfax Media.

"The alternative proposals are to have inquiries which take years and years and years.

"We believe in getting on with these things now, there is now need to drag that process out."

Crossbench senator Nick Xenophon said the productivity commission's powers were not extensive enough for a comprehensive inquiry into the financial sector.

Senator Xenophon backed a Royal Commission or Commission of Inquiry instead.

"I think that it will be something comprehensive, it will be forensic and it will be able to deal with issues in a way the Productivity Commission simply doesn't have the powers to deal with in terms of calling witnesses," he told ABC.